Its apparently a good time for disasters. Recently, an earthquake hit near Washington, D.C., and Hurricane Irene is apparently moving north toward the densely-populated Mid-Atlantic and New England coasts. Lets try to nip one piece of rhetoric in the bud: the earthquake was not good for the economy. Hurricane Irene will not be good for the economy. Natural disasters are never good for the economy. They might create new flows of spending, but those new flows of spending are created in order to replace destroyed wealth.

Heres a prediction: after Hurricane Irene does its damage, someone will claim that the hurricane was actually a good thing, that it will create spending, create jobs, and move us back toward prosperity. That someone will be wrong for reasons Frederic Bastiat made clear in his classic essay That Which is Seen, and That Which is Not Seen.

Heres Bastiats lesson, restated again: suppose a neer-do-well child throws a rock through a storekeepers window. The storekeeper is obviously unhappy because he has to pay to replace the window, but someone points out that the storekeepers new spending will stimulate the economy because after all, he provides income for the glassmaker, who might then spend his new income on a new suit, which provides income for the tailor, who might spend his new income on a meal at a fine restaurant, which creates income and employment for the people who work in the restaurant. What looks like a curse is actually a blessing.

Except that it isnt. What this ignores is that if he hadnt had to replace his window, the shopkeeper could have used his money for something else. Perhaps he would have bought a new suit himself, and then somewhere along the line someone else would have purchased new windows. Perhaps he would have saved it and provided capital for a firm that wanted to expand production or for an entrepreneur who would have started a new business. The broken window leaves the world poorer by one window. Wealth has been destroyed.